Our opinion on the current state of ARI

African Rainbow Minerals (ARI) is a diversified mining company controlled by Patrice Motsepe, involved in a variety of mining ventures. Its interests include platinum group metals (PGM), iron ore, manganese, chrome, coal and copper. It also owns 12,2% of Harmony Gold. There has been some speculation about a possible acquisition. One possibility is an involvement in the Wafi-Golpu copper and gold resource which is jointly owned by Harmony and Australian mining company, Newcrest. Harmony is looking for help in financing its share of the development cost of this massive resource - which is estimated at around R21bn - so maybe ARM could be part of that solution. The company is looking for acquisitions of "green metals" mines that produce metals used in the move to avert climate change. In its results for the year to 30th June 2023 the company reported headline earnings per share (HEPS) down 21% and a final dividend of R12 per share. The company said, "Iron ore, manganese ore and thermal coal volumes were negatively impacted by logistics challenges. - Unit production costs remained under pressure due to lower production volumes and above-inflation increases in the costs of explosives, diesel, electricity, consumables, and maintenance costs". Technically, the share has been falling since the beginning of 2023 because of declining commodity prices. We think that this is a good mining share which is gaining stability from its diversification into base metals - but it remains risky, especially if its board decides to invest in a new area (like Wafi-Golpu) which involves extended commitment.